by John Seymour
Last September, the Arlington County Board adopted an updated Community Energy Plan establishing ambitious targets for transforming the County’s energy sector over the next few decades. In the Plan, the County committed to become “carbon neutral” by 2050. It also set a number of interim carbon reduction targets. For instance, government operations are to be powered by 50% renewable electricity by 2022 and 100% renewable electricity by 2025. And the county as a whole is to receive 100% of its electricity from renewables no later than 2035. Skeptics wondered how the County could realistically achieve these goals.
On Tuesday, January 28, the Arlington County Board will consider a proposed power purchase agreement with Dominion Energy Virginia for a portion of the output from a new 120-megawatt solar farm to be constructed by Dominion in Pittsylvania County. If the agreement is approved by the County Board, the power obtained by Arlington would constitute a significant step toward reaching the Community Energy Plan’s targets. Arlington’s purchase of nearly 80 million kilowatt-hours annually would represent about 83% of the total amount of electricity used by the County’s government each year. It would more than satisfy the County government’s 2022 goal – and come close to the 2025 goal. The solar farm is to be operational as early as 2022 and will be called “the Amazon Arlington Solar Farm Virginia.”
Under the agreement, the power produced by the farm will not be delivered directly to Arlington County. Rather, under this kind of “virtual power purchase agreement,” the county will enter into a long-term contract for the purchase of a portion of the solar farm’s power, but the power itself will be sold into the wholesale power market. The agreement does involve some financial risk. If, for example, the wholesale price of power over time proves to be less than the contract price, then the County will pay a premium for the renewable energy. If, on the other hand, the wholesale price of power increases, then the County will benefit. The County’s financial due diligence estimates that the agreement will be “expense neutral” in the near-term and may reduce energy costs over the long-term. At the same time, Arlington will receive renewable energy certificates demonstrating that it has “legally greened” a significant portion of its energy supply.
The County deserves considerable credit for negotiating this agreement. Arlington’s Energy Plan had estimated that, to achieve the greenhouse gas emissions targets, it would need to obtain the vast majority of its electricity through renewable energy certificates — not from on-site renewables or directly from nearby renewable facilities. For some years now, Arlington has purchased “low-quality” renewable energy certificates from out-of-state providers. Those certificates, however, have been the subject of some criticism because they do not add to renewable capacity in Virginia. “Blue states purchasing renewable power from red states to look green” is how they have frequently been characterized.
In addition, critics complain that the very low prices of the purchased certificates indicate that they don’t provide much, if any, stimulus to renewable production even in their states of origin. The “high-quality” certificates provided under the proposed Arlington/Dominion agreement, on the other hand, represent a significant county, Dominion, and Virginia investment in solar power. Other Virginia municipalities reportedly will be watching with care Arlington’s experience with electricity prices for the next seventeen years (the delivery term) and, depending on the Arlington’s experience, are expected to pursue similar agreements.
The potential climate-mitigating effects of the agreement are important and further demonstrate the County’s leadership in matters of environmental stewardship. Perhaps more important to Arlington in the long-term, however, are the partnerships forged or strengthened in the agreement. The only other customer of the new solar farm is Amazon, which is building its new headquarters in Arlington, and is contracting for two-thirds of the output. Like Arlington, Amazon has made bold commitments to net-zero carbon emissions and sees agreements like this one as essential to fulfill those commitments.
Arlington’s other “partner” — Dominion Energy — supplies power to Arlington County and other municipalities under contracts with the Virginia Energy Purchasing Governmental Association (VEPGA). The power purchase agreement is an innovative “Arlington-specific supplement” to the existing VEPGA agreement.” Dominion has been subject to widespread and longstanding criticism by environmental groups for its reluctance to invest substantially in renewables and for its continued emphasis on fossil fuels. The proposed agreement bodes well for improving the sometimes fraught relationship between Dominion and other progressive Virginia municipalities, such as Arlington. It will also lengthen, I believe, the “environmental honeymoon period” currently enjoyed by Arlington and its most recent corporate resident, Amazon.